Senate Set To Pass Income Tax

Approval Would End A 52-day Impasse

Senate Poised To Pass Income Tax, Ending Stalemate

After working until nearly 2 a.m., the Senate postoned until later today a vote on an income tax plan that Gov. Lowell P. Weicker Jr. and legislative leaders expect will end the long-running state budget impasse.

A fragile coalition of 18 senators had been poised to approve the plan and send it to the House of Representatives, but senators adjourned at 1:40 a.m., after disagreements prompted redrafting of the bill.

Weicker, whose call in February for an overhaul of the tax structure set off what became one of the most protracted legislative battles in state history, was elated at the prospect of an end to the political odyssey.

"My reaction is this could very well be the most important evening in the history of this state for the last several decades, certainly," Weicker said Tuesday afternoon.

But at 2:45 a.m. today, he was meeting with legislators to discuss the last-minute problems, which involved efforts to hold down state labor costs, and presumably to urge that the coalition of 16 Democrats and two Republicans hold together.

The $7.9 billion spending plan for 1991-92 calls for a tax and fee increase of about $1.1 billion. It is built around a 4.5 percent income tax, coupled with a cut in the sales tax from 8 percent to 6 percent and a reduction in the corporate tax rate.

A mix of exemptions and tax credits aimed at middle-income families lowers the rate to 1.1 percent, or $8.44 a week, for joint filers whose adjusted gross income is $39,000.

The exemptions and credits are phased out by $75,000, so couples earning $79,000 would pay the full 4.5 percent, or $68.36 a week.

If passed by the House and signed by the governor, wages would be taxed for the first time in the state's history, effective Sept. 1. The highest-in-the-nation sales tax would drop to 6 percent on most items Oct. 1.

The sales tax for new cars would drop to 6 percent upon passage.

House Speaker Richard J. Balducci, D-Newington, predicted that

if the labor problem is resolved the House will approve the budget today and immediately send it to Weicker, 52 days after the July 1 start of the fiscal year.

At issue were provisions that would make it easier for the legislature to reject state binding arbitration agreements and otherwise set a tougher tone for bargaining with state employees.

Negotiations over the provisions delayed a debate that senators had hoped would begin at 8 p.m. Tuesday. "I think it could cause a problem," Balducci said. "How big a problem, I don't know. Hopefully, we can get it negotiated into something that's doable, acceptable by everybody."

The other labor provisions would require a 40-hour workweek for employees not covered by current labor agreements, most of which specify a 37 1/2 -hour workweek. State negotiators also would be directed to seek increased insurance payments from employees.

Also controversial was a section requiring legislative approval of consent decrees that commit the state to more than $2.5 million in spending, a reaction to settlements of lawsuits that have forced higher spending. The requirement would not take effect until June 1992, allowing further legislative review.

Legislators said all items had been resolved, except binding arbitration, and they predicted the coalition would hold.

Weicker, whose top legislative aide, Thomas J. D'Amore, was a party to the negotiations that produced the Senate package, is expected to sign the bill into law the moment it reaches his desk.

The governor, who took office in January as Connecticut's first third-party governor since the Civil War, vetoed three previous budgets, all of which were based on an expansion of the 8 percent sales tax.

Weicker said the vetoed budgets, which increased business taxes, would have slowed the state's economic recovery.

The new Senate plan also expands the sales tax to items now exempt, ranging from home repairs to boat slips. Taxes on cigarettes and petroleum products also will increase.

A constitutional cap on spending and other so-called spending reforms are part of the plan.

Announcing the details was left to three relatively unknown Democratic state senators, all former opponents of the income tax who reconsidered their opposition in return for a variety of concessions.

They revealed their decision to vote for the plan at a dramatic press conference attended by most members of the Senate, about 100 lobbyists and dozens of others. Standing in the back of the room, unnoticed, was Weicker.

The senators, who all were elected in 1986 and never had achieved top leadership status or were active in tax issues, are: Steven Spellman of Stonington, a lawyer; Marie A. Herbst of Vernon, a teacher; and Gary A. Hale of Ansonia, a lawyer.

All three said that Weicker's vetoes of the three budgets previously passed prompted them to participate in finding an income-tax-based budget that could attract 18 votes in the Senate, the chamber traditionally most hostile to a tax on wages.